2010 (9) TMI 639 - AT - Service Tax

Waiver of pre deposit - Export of service - Rule 3(2) also provides two more additional conditions stipulating that such service should be delivered outside India and used outside India and payment for such service provided outside India is received by the service provider in convertible foreign exchange - Translanka s services to the above airlines are rendered, within the specified territories in India and the services are also consumed in India only - Mere receipt of convertible foreign exchange which was done at the instance of Translanka and execution of contract/agreement at Srilanka will not make a taxable service rendered in India, as Export of Service - Decided against the assessee and to pre-deposit an amount of Rs. 18,00,000/- (Rupees eighteen lakhs only) within eight weeks

Summary

Issues:
1. Whether the services provided by the appellants to M/s. Srilankan Airlines constitute 'export of service' and are exempt from service tax.
2. Whether the contract fee received by the appellants is subject to service tax liability.

Analysis:
1. The appellant argued that the services provided to M/s. Srilankan Airlines, headquartered in Srilanka, qualify as 'export of service' and are not subject to service tax. They relied on a circular stating that receiving payment in foreign currency deems the service as exported. However, the respondent contended that since the services were provided within India to a recipient with commercial establishments in India, they do not qualify as export. The Tribunal referred to the Export of Services Rules, emphasizing conditions such as service delivery and payment in foreign exchange. The adjudicating-Commissioner found that the services were provided within India and consumed there, concluding that they did not meet the criteria for export. The Tribunal directed the appellants to pre-deposit a sum considering financial hardship, as they failed to establish a strong case for a full waiver.

2. Regarding the contract fee, the appellants acknowledged their liability to pre-deposit the service tax amount related to this fee. The Tribunal, after considering the arguments and circumstances, directed the appellants to pre-deposit a specific amount within a specified timeframe. The compliance deadline was set accordingly. The Tribunal's decision was based on a detailed analysis of the service provision, payment terms, and relevant legal provisions, ensuring a fair consideration of both parties' arguments and circumstances.